With CMMI's announcement of the Long-term Enhanced ACO Design (LEAD) model—the successor to ACO REACH—a wave of forecasts and confident claims about how your practice will perform in the new model is likely. While we believe the core known elements of LEAD are novel and exciting, we urge caution here.
Value-based care is about improving upon past performance, but participants must also understand their risk exposure and starting position before committing to a new model. A poor first-year outcome can derail a practice's confidence in value-based care for years to come.
The Problem with Early Projections
Here's the reality: reliable underwriting depends on how closely certain critical concepts in LEAD's underlying structures mirror existing models like ACO REACH and MSSP. If the core mechanics are similar, experienced underwriters can produce credible forecasts relatively quickly (by April or May). If LEAD introduces fundamentally different approaches, even the best actuaries and data scientists will need until June or early July to build their models faithfully.
The difference between these scenarios will be determined by how LEAD handles five key structural elements.
Five Categories That Determine Underwriting Reliability
1. Claims Alignment Methodology
Before forecasting performance, underwriters must predict which patients will be aligned to a given provider group. ACO REACH and MSSP take different approaches to alignment—particularly in how tightly they link patients to specific provider types (primary care physicians versus other clinicians, for example).
If LEAD's alignment methodology resembles one of these existing frameworks, underwriters can leverage historical data with confidence. If it's something entirely new, the models need to be rebuilt from the ground up.
2. Benchmark Construction
Once you know which beneficiaries are likely to be aligned, you need to estimate their baseline spending absent value-based care interventions. This involves several components: the rate book (how much services cost), enrollment categories (aged, disabled, dual-eligible, ESRD), and the reference periods used to project future costs.
The good news: rate books will likely follow the MA-inspired approach used in REACH. Key variables to watch are the benchmark periods and their weighting (e.g., whether LEAD uses more recent data with equal or variable weighting across years).
3. Trending Approach
Trending determines how costs are projected forward from benchmark periods to the performance year. Two dimensions are particularly crucial for accurate underwriting: timing and geographic blend.
On timing, the key question is whether trends will be established prospectively—before the performance year begins—or retrospectively. MSSP and REACH both feature prospective trending, while MSSP also has a retrospective track. To the extent LEAD mirrors REACH’s approach across categories, reliable forecasting will be available more readily; insofar as LEAD borrows from REACH for Alignment and Benchmark, but uses MSSP’s retrospective trend approach (or, for that matter, another method), fitting the pieces together will take more time.
On geography, it matters whether trends are calculated against a national population or regional groupings. A national, prospective approach aligns well with existing REACH underwriting frameworks. A regional, retrospective approach would require underwriters to blend methodologies from REACH and MSSP—mixing alignment logic from one program with trending mechanics from another. That's a messier exercise that takes more time to get right.
4. Risk Adjustment
Risk adjustment accounts for the health status of aligned beneficiaries. The primary question is straightforward: will LEAD use V28 (the current CMS-HCC model) or introduce something different?
While the CMMI Director has previously discussed the potential benefits of "inferred risk" approaches, and CMMI further noted it in its inaugural Strategy Statement, the LEAD announcement didn't signal this direction. We therefore expect V28 for the 2027 performance year, though alternative approaches could emerge later in the model's ten-year span.
The LEAD announcement also referenced distinct treatment for high-needs beneficiaries. If this follows the existing ACO REACH methodology—with quarterly risk score updates for patients that otherwise meet High Needs threshold (e.g., with four or more chronic conditions)—that aspect of existing models can be applied to LEAD. A novel approach would require more time to understand and accurately reflect in the models.
5. Quality Measurement
Value-based care models include quality measures to ensure that cost reduction doesn't come at the expense of patient health. These measures serve as guardrails, keeping ACOs aligned with the core promise of value-based care.
What matters for underwriting is whether quality metrics will be observable through claims data and how they'll translate to earnback percentages. Quality performance can often impact savings forecasts by five points or more, a material impact that demands sophisticated forecasting rather than static assumptions.
When to Trust the Numbers
Where CMMI comes out on important variables—such as benchmark weighting, trending specifics and quality measures—will determine whether adjustments to REACH models will work or whether fundamental rebuilds will be required for reliability. Similarly, whether there are new or different features of the LEAD Model and how they are structured will be critical in trying to achieve accuracy in projections.
Practices that have historically performed well with high-needs populations, as well as rural health organizations, should pay particular attention to LEAD's structure. Depending on how the model treats these groups, LEAD could present meaningful opportunities.
A Long-Term Commitment
Entering value-based care isn't a one-year decision. It requires sustained commitment to evolving practice workflows and care delivery.
When evaluating LEAD projections this spring, ask your underwriting partners a simple question: which of these five structural elements are they confident about, and which remain uncertain? If the answer is "we're confident about everything" before the RFA is even published, that's your signal to seek a second opinion.
The goal isn't to find the model where you'll look best on paper. It's to find the model where you're positioned to succeed—and to build from there.
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